WhatsApp sale shows the lost potential of BlackBerry’s BBM

For most people, their first reaction upon hearing the news that Facebook is purchasing WhatsApp for US$19 billion was one of shock. Even Gary Klassen, one of the creators of BlackBerry Messenger (and WhatsApp rival) tweeted simply, “Wow.” BlackBerry investors, however, felt a twinge of hope.

The company’s stock popped in after hours trading and is up more than 3% this morning. The WhatsApp purchase probably has investors thinking that BBM is worth more than previously thought. WhatsApp, founded only five years ago, has accumulated approximately 450 million monthly users. With the company’s sale price of $19 billion, that works out to $42 per user. BBM has 80 million users; employing the same—and admittedly crude—calculation, BBM is worth a staggering $3.4 billion. That’s a crazy figure when you consider BlackBerry’s entire market cap is less than $5 billion right now. (Maynard Um, an analyst at Wells Fargo, has a different way of assessing BBM that puts its worth considerably lower.)

It’s important to keep in mind there are huge differences between WhatsApp and BBM. Facebook clearly believes WhatsApp can grow even bigger, compliment its services, and help churn out meaningful revenue. BBM appears to be stagnating. If anything, the sale of WhatsApp illustrates what could have been for BBM.

The messaging service was one of the main reasons to own a BlackBerry for a long time. Users loved it, and when BlackBerry began to hit hard times in the face of competition, they would tell you that BBM was the reason they were sticking around and not defecting to an iPhone or an Android smartphone. Still, the company debated internally about bringing BBM to other mobile platforms to increase its reach and bring in revenue. Nothing much happened on that front for a while. It’s easy to understand why. BlackBerry, as a hardware company, saw BBM as a way to sell smartphones. If it made BBM available everywhere, then maybe people would stop buying BlackBerry handsets.

But what the company didn’t weigh as heavily was that as soon as a comparable (or good enough) cross-platform messaging app emerged, the appeal of BBM—and, by extension, BlackBerry handsets themselves—would diminish regardless. BlackBerry users would have less incentive to stay loyal.

WhatsApp has proven to be that cross-platform service with massive appeal. Even Kik, founded by a guy who worked at BlackBerry as a student at the University of Waterloo, claims to have 100 million users, which would make it larger than BBM. By the time BlackBerry decided to make BBM available on Android and iOS last year, it was too late. The launch itself ran into problems, and while the iPhone and Android versions were popular when they did finally get out, interest may have waned since then.

Who knows if BBM could ever have become as popular as WhatsApp had it gone cross-platform sooner. Right now, what’s important is where BBM is going, and that’s uncertain. The company announced this month that Andrew Bocking, the executive in charge of BBM, is leaving the company. His replacement, John Sims, provides some clues as to what’s in store for the messaging service. Sims is also the president of global enterprise services, suggesting the company wants BBM to be enterprise-focused. CEO John Chen alluded to this on the company’s earnings call in December. A lot of BBM’s users are what Chen calls “professional consumers” and are heavily engaged with the service, spending 90 minutes per day on it. That provides a great base to work with, provided Chen can figure out how to make money with BBM. In December, Chen said he expects to “see some reasonably good revenue” from BBM by fiscal 2016, but he didn’t elaborate on how to get there.

BBM may yet carve out a profitable niche, but the mass market is long gone.